FAR 52.228-15—Performance and Payment Bonds-Construction.
Plain-English Summary
FAR 52.228-15, Performance and Payment Bonds-Construction, is the standard construction bonding clause used to protect the Government and subcontractors on covered construction contracts. It addresses the definition of "original contract price," when performance and payment bonds are required, the required penal amounts for each bond, the Government’s ability to require additional bond protection if the contract price increases, the deadline for furnishing executed bonds, acceptable forms of surety or other security, and the rule governing waivers of subcontractor rights to sue on the payment bond. In practice, this clause is a core risk-allocation tool: it helps ensure the contractor will complete the work, and that subcontractors and suppliers will be paid if the prime contractor fails to pay them. For contracting officers, it is a compliance and administration checkpoint before work starts and whenever the contract price changes. For contractors, it creates a mandatory pre-performance obligation to secure and deliver acceptable bonds, and it can require additional bonding later if the contract is modified upward. For subcontractors and suppliers, it preserves statutory payment-bond protections and limits the enforceability of any waiver of those rights.
Key Rules
Defines original contract price
The clause defines "original contract price" as the award price of the contract, or for requirements contracts the price payable for the estimated total quantity, or for indefinite-quantity contracts the price payable for the specified minimum quantity. Options are excluded unless exercised at award.
Bonds required above threshold
Unless the resulting contract price is at or below the FAR 28.102-1(a) threshold at award, the successful offeror must furnish both performance and payment bonds. This makes the bonding requirement mandatory for covered construction awards above the threshold.
Performance bond amount
The performance bond must be in the penal amount of 100 percent of the original contract price at the time of award. This protects the Government against contractor default and helps ensure completion of the work.
Payment bond amount
The payment bond must also be in the penal amount of 100 percent of the original contract price at award. This protects subcontractors and suppliers by providing a source of payment if the prime contractor does not pay them.
Additional bond protection
If the contract price increases, the Government may require additional performance and payment bond protection, generally equal to 100 percent of the increase. The Government may require the contractor to increase the existing bond or obtain a separate additional bond.
Bonds due before work starts
The contractor must furnish all executed bonds, including any necessary reinsurance agreements, within the time specified in the solicitation’s bid guarantee provision or as otherwise directed by the contracting officer, but in all cases before starting work.
Acceptable surety or security
Bonds must be supported by acceptable security, including corporate sureties listed in Treasury Circular 570, individual sureties, or other acceptable security such as certain cash-equivalent instruments or authorized U.S. obligations. The clause points users to Treasury Circular 570 for approved corporate sureties.
Limits payment-bond waivers
Any waiver of the right to sue on the payment bond is void unless it is in writing, signed by the person waiving the right, and executed only after that person has first furnished labor or material for the contract.
Responsibilities
Contracting Officer
Determine whether the contract is subject to the bonding requirement, ensure the solicitation and award documents require the proper bonds, verify that executed bonds and any required reinsurance agreements are received before work begins, and require additional bond protection if the contract price increases.
Successful Offeror / Prime Contractor
Obtain and furnish acceptable performance and payment bonds in the required amounts and within the required time, maintain any required additional bond protection if the contract price increases, and ensure the bonds are supported by acceptable surety or other security.
Surety / Individual Surety / Provider of Other Security
Provide firm commitment backing the bond in an acceptable form, meet Treasury and regulatory requirements, and support the contractor’s bonding obligation with valid security.
Subcontractors and Suppliers
Provide labor or materials as applicable and understand that any waiver of payment-bond rights is unenforceable unless it is written, signed, and executed only after they have first furnished labor or material.
Agency
Apply the FAR threshold and bonding policy correctly, use the clause in covered construction contracts, and support contracting officers in enforcing bond requirements and reviewing surety acceptability.
Practical Implications
Contractors cannot start work until the bonds are fully executed and delivered, so bonding should be arranged early in the acquisition process.
A common pitfall is assuming options count toward the original contract price; they generally do not unless exercised at award, which affects the bond amount calculation.
If the Government issues a modification that increases the contract price, the contractor may need to increase the bond or obtain an additional bond, so bond capacity should be monitored throughout performance.
Contracting officers should verify surety acceptability against Treasury Circular 570 and not rely on informal assurances or incomplete bond paperwork.
Subcontractors and suppliers should be cautious about signing any waiver of payment-bond rights, because pre-performance waivers are void and only limited post-performance waivers are enforceable.
Official Regulatory Text
As prescribed in 28.102-3 (a) , insert a clause substantially as follows: Performance and Payment Bonds-Construction (Jun 2020) (a) Definitions . As used in this clause- Original contract price means the award price of the contract; or, for requirements contracts, the price payable for the estimated total quantity; or, for indefinite-quantity contracts, the price payable for the specified minimum quantity. Original contract price does not include the price of any options, except those options exercised at the time of contract award. (b) Amount of required bonds . Unless the resulting contract price is valued at or below the threshold specified in Federal Acquisition Regulation 28.102-1 (a) on the date of award of this contract, the successful offeror shall furnish performance and payment bonds to the Contracting Officer as follows: (1) Performance bonds ( Standard Form 25 ) . The penal amount of performance bonds at the time of contract award shall be 100 percent of the original contract price. (2) Payment Bonds ( Standard Form 25A ) . The penal amount of payment bonds at the time of contract award shall be 100 percent of the original contract price. (3) Additional bond protection. (i) The Government may require additional performance and payment bond protection if the contract price is increased. The increase in protection generally will equal 100 percent of the increase in contract price. (ii) The Government may secure the additional protection by directing the Contractor to increase the penal amount of the existing bond or to obtain an additional bond. (c) Furnishing executed bonds . The Contractor shall furnish all executed bonds, including any necessary reinsurance agreements, to the Contracting Officer, within the time period specified in the Bid Guarantee provision of the solicitation, or otherwise specified by the Contracting Officer, but in any event, before starting work. (d) Surety or other security for bonds . The bonds shall be in the form of firm commitment, supported by corporate sureties whose names appear on the list contained in Treasury Department Circular 570, individual sureties, or by other acceptable security such as postal money order, certified check, cashier's check, irrevocable letter of credit, or, in accordance with Treasury Department regulations, certain bonds or notes of the United States. Treasury Circular 570 is published in the Federal Register or may be obtained from the: U.S. Department of the Treasury, Financial Management, Service Surety Bond Branch, 3700 East West Highway, Room 6 F01, Hyattsville, MD 20782. Or via the internet at http://www.fms.treas.gov/c570/ . (e) Notice of subcontractor waiver of protection (40 U.S.C. 3133(c)). Any waiver of the right to sue on the payment bond is void unless it is in writing, signed by the person whose right is waived, and executed after such person has first furnished labor or material for use in the performance of the contract. (End of clause)